Tag Archives: Joe Ashton

Being pro-pigeon and anti-Trident may be popular stances, but it’s a truism in professional political punditry that serious candidates don’t stand up for that kind of thing. Yvette Cooper, Andy Burnham, and Liz Kendall are too professional as politicians to have that kind of thing in their political record.

I became a socialist in a business studies class at Napier many years ago. The lecturer didn’t know he was making me a socialist: he was explaining company structure. A company is run by its CEO, who is appointed by the company shareholders. The CEO’s first responsibility is to the shareholders: this is in general expressed as a legal obligation to keep the value of the shares rising. Because the value of the shares is usually dependent on the company profits rising quarterly, a CEO’s goal is to have each financial quarter show more profits than the last.

In small-scale companies, with few shareholders all of whom take a personal interest in the doings of the company, the CEO can be instructed to make the profits of the company secondary to other things which are more important to the shareholders than seeing the value of their shares go up and up: their good name in producing quality goods for sale, their desire not to exploit or discriminate against their employees, their belief in climate change, their desire to own both an ecologically sound as well as a profitable company.

But in large-scale companies, where the shareholders are themselves corporations, there is no such human check. The CEO representing the corporate owner of the shares has the overriding legal obligation to see profits go up. And because this is the overriding focus of the business, they frequently expect their employees – whose wages may have been frozen or cut in pursuit of that goal – to share their focus in making profits go up.Continue reading →